Generac: Aging U.S. Power Grid Lifts Generator Demand

Generac Holdings' (GNRC) fourth-quarter results exceeded forecasts as East Coast, Midwest and Southern homeowners and businesses bought more of its generators to cope with destructive storms.

The company expects demand to remain strong and sees 2014 sales to rise in the mid-single-digit range, better than consensus of Thomson Reuters analysts for a 3.4% rise.

CEO Aaron Jagdfeld told CNBC in a post-earnings interview that people are finding the aging U.S. power grid unreliable and buying generators as a precaution, adding, "power outages are on the rise — they have been for the last 20 years."

Earnings per share jumped 28% to $1.11, beating views of 90 cents, as an improved product mix and lower costs sent gross margin soaring 180 basis points vs. the prior year to 38.7%.

Revenue climbed 10% to $376.2 million, topping estimates of $361.1 million and marking the 10th straight quarter of double- or triple-digit sales growth, though the latest rise was also the smallest in 10 quarters.

Shares were up 12% on the stock market today. Generac is also on the IBD 50 list of top-rated stocks and hit an all-time high of 57.29 on Jan. 6.

Growth in Q4 was driven by strong shipments of home standby generators and commercial products, boosted by recent acquisitions, but partly offset by a decline in shipments of portable generators.

On Nov. 1 the company closed its purchase of Baldor Electric's generator division, adding its $55 million-$70 million worth of sales.

"Once again we experienced strong growth across all regions of the United States, as home standby generators further gain in popularity," Jagdfeld said in a statement.

Generac Holdings' (GNRC) fourth-quarter results exceeded forecasts as East Coast, Midwest and Southern homeowners and businesses bought more of its generators to cope with destructive storms.

The company expects demand to remain strong and sees 2014 sales to rise in the mid-single-digit range, better than consensus of Thomson Reuters analysts for a 3.4% rise.

CEO Aaron Jagdfeld told CNBC in a post-earnings interview that people are finding the aging U.S. power grid unreliable and buying generators as a precaution, adding, "power outages are on the rise — they have been for the last 20 years."

Earnings per share jumped 28% to $1.11, beating views of 90 cents, as an improved product mix and lower costs sent gross margin soaring 180 basis points vs. the prior year to 38.7%.

Revenue climbed 10% to $376.2 million, topping estimates of $361.1 million and marking the 10th straight quarter of double- or triple-digit sales growth, though the latest rise was also the smallest in 10 quarters.

Shares were up 12% on the stock market today. Generac is also on the IBD 50 list of top-rated stocks and hit an all-time high of 57.29 on Jan. 6.

Growth in Q4 was driven by strong shipments of home standby generators and commercial products, boosted by recent acquisitions, but partly offset by a decline in shipments of portable generators.

On Nov. 1 the company closed its purchase of Baldor Electric's generator division, adding its $55 million-$70 million worth of sales.

"Once again we experienced strong growth across all regions of the United States, as home standby generators further gain in popularity," Jagdfeld said in a statement.

See Also

The maker of residential and industrial generators reached a 6-month high after topping views by 21 cents with a 12% EPS dip to 98 cents. Revenue rose 7.4% to $404 mil, beating views for $359.3 mil, as generator sales to the oil and gas industry rose. Generac (NYSE:GNRC) said it expects '15 sales ...

Generac (NYSE:GNRC) shares touched a six-month high Wednesday after it reported strong fourth-quarter sales and earnings, which got a boost from generator sales to the oil and gas industry. The maker of residential and industrial generators also expects 2015 sales will rise in the low-to-mid-single ...

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11/06/2014 10:41 AM ET

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